Key points to remember:
- Aggressive Bitcoin buying by Strategy helped offset recent leveraged long selloffs.
- Rising bond yields and the heavy burden of US public debt are pushing investors into scarce assets.
- A possible deal between the United States and Iran could quickly restore traders’ risk appetite.
Bitcoin (BTC) was rejected following a failed attempt to surpass $82,000 on Thursday. A subsequent retest of the $76,000 level on Monday triggered $400 million in liquidations for bullish Bitcoin positions over a four-day period. Even though trader confidence was affected by the 7% price drop, the prospects of climbing back above the $80,000 mark remain valid.
Bitcoin Reserve Accumulation by Strategy (MSTR US). Source: Strategy
US-listed strategy (MSTR US) finalized $2 billion acquisition in BTC in the last week alone. Led by Michael Saylor, the company continues to surprise investors by finding innovative ways to reduce the cost of capital and raise cash through issuance of stock, whether through MSTR common stock or STRC preferred stock.
More importantly, Strategy proved that the company can also take advantage of a weaker market by buying $1.5 billion of its debt due in 2029. The withdrawal of some of its senior convertible notes reduces potential future dilution for current MSTR holders. The move paves the way for the issuance of new shares and additional purchases of Bitcoin.
S&P 500 Index (left) versus 10-year U.S. Treasury yield (right). Source: Trading View
From a macroeconomic perspective, the chances of sustained bullish momentum for Bitcoin improved as traders demanded higher yields for holding government bonds. Yields on 10-year Treasury notes jumped to 4.60%, hitting their highest level in 16 months. Investors are gradually waking up to the heavy burden on the U.S. Treasury, especially with $2 trillion in long-term debt maturing in 2026.
US Dollar Weakness and Potential Iran Deal
The US Federal Reserve will likely need to continue accumulating bonds and Treasuries, a move that could weaken the US dollar. Typically, investors seek refuge in scarce assets when they lose confidence in the central bank’s ability to weather a crisis without devaluing the currency. Even though gold is the main beneficiary, the incentive to hold fixed income assets diminishes significantly.
Gold/USD (left) versus Bitcoin/USD (right). Source: TradingView
Gold prices surged in January after the United States captured Venezuelan President Nicolas Maduro and President Trump’s global trade war intensified. However, gold retraced most of these gains over the next four months, while Bitcoin built strong bullish momentum, rising from $65,000 to $76,500 in late February. These recent price movements suggest growing confidence in Bitcoin as a reliable hedging instrument.
Related: Analysts wonder if Bitcoin is in a ‘sell in May’ bear market pattern
Brent crude oil prices jumped to $113 on Monday as negotiations to fully reopen the Strait of Hormuz backtracked. Oil prices have surged more than 50% since the attack on Iran by the United States and Israel in late February. President Trump’s administration also decided not to renew the waiver for Russian crude oil, further reducing supply. according to at Yahoo Finance.
A US-Iran deal, while not the baseline scenario, could trigger a surge in risk appetite and catapult the price of Bitcoin. return above $80,000. Inflation has been dampened by high energy prices, limiting the chances of expansionary monetary policies. Nonetheless, the odds favor Bitcoin as the US stock market is nearing its all-time high while the cryptocurrency is still 39% below its peak.
